Refer to the original data. Rather than purchase new equipment, the marketing manager argues that the company’s marketing strategy should be changed. Rather than pay sales commissions, which are currently included in variable expenses, the company would pay salespersons fixed salaries and would invest heavily in advertising. The marketing manager claims this new approach would increase unit sales by 50% without any change in selling price; the company’s new monthly fixed expenses would be $348,000, and its net operating income would increase by 25%. Compute the break-even point in dollar sales for the company under the new marketing strategy.

Morton Company’s contribution format income statement for last month is given below:

Sales (46,000 units × $24 per unit)	$	1,104,000
Variable expenses		772,800
Contribution margin		348,000
Fixed expenses		264,960
Net operating income	$	66,240

Answer rating: 100% (QA)

Compute the breakeven point in dollar sales for the company under the new marketing strategy S... View the full answer